State-owned Oil and Natural Gas Corp (ONGC) in talks with Mitsui Group of Japan

State-owned Oil and Natural Gas Corp (ONGC) is in talks with Mitsui Group of Japan for setting up a liquefied natural gas (LNG) import terminal at Mangalore as part of its diversification plans.
ONGC had in 2005 proposed to build a five million tons a year LNG import and regassification terminal adjacent to its subsidiary Mangalore Refinery in Karnataka.
The plans were shelved after May 2006 exit of chairman Mr Subir Raha. The idea of making ONGC a diversified firm with interest across the entire energy value chain was Mr Raha's brainchild.
The company, after Mr Sudhir Vasudeva took as the chairman and managing director last year, has again revived the diversification plan and is now actively looking at setting up LNG terminal at Mangalore to meet the fast growing energy needs in the country, sources privy to the development said.
ONGC plans to sign an agreement with Mitsui to explore opportunities for setting up an LNG terminal in India, specifically at Mangalore, or at any other mutually identified locations, they said, adding the duo would also market the imported fuel.

Sources said ONGC wants to use Mitsui's 30 years of global experience to source LNG. A gas-based power plant may also be set up at a later stage.
Besides, the two would also explore opportunities of joint bidding for forthcoming exploration rounds, such as NELP (New Exploration License Policy) and Shale Gas Blocks.
Sources said ONGC feels domestic gas availability at 197 million standard cubic meters per day in 2015-16 will be way short of a demand of 290 mmscmd. The balance demand of 93 mmscmd would have to be met through imported LNG (24.8 million tons per annum).
Considering the huge potential demand of LNG, ONGC wants to join the race for setting up the LNG terminal.

The country now has two operational LNG import facilities ~ 10 million tons unit at Dahej in Gujarat operated by Petronet LNG Ltd and a 3.6 million tons terminal of Shell-Total at Hazira.
Another five million tons facility is almost complete at Dabhol in Maharashtra, while Petronet is building an equal size terminal at Kochi in Kerala by the year-end.
State-owned gas utility GAIL India and Petronet plan to set up separate import facilities on the east coast. Shell has teamed up with Reliance Power for a floating LNG terminal off the Andhra coast while Indian Oil Corp (IOC) is doing studies for a terminal at Ennore in Tamil Nadu.
Sources said ONGC too wants to be part of the LNG business and it considers Mitsui as the vehicle for entry into the lucrative business.